Revenue Management for Hospitality

REVENUE MANAGEMENT FOR
HOSPITALITY

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Overview of the Hotel.................................................................................................................1
Pricing strategy evaluation..............................................................................................................1
Financial performance.....................................................................................................................3
Conclusion.......................................................................................................................................4
REREFENCES................................................................................................................................6

Introduction
Hospitality industry is one of those industry that provides different kinds of services and
products to their customers (Beerli-Palacio, Martín-Santanaand Román-Montoya, 2020).
Different types of hospitality industry organizations provide different kinds of services to the
customers. Hotel business is one of the type of organizations in hospitality industry. Each type of
hotel has its own strategy which is used by them in order to attract a greater number of customers
and increase their overall profitability. Financial performance of the Hotel completely depends
upon the type of pricing strategy that has been adopted by them. This assignment will lay
emphasis on pricing strategy and financial performance of Blue City Heritage Hotel.
Overview of the Hotel
Blue City Heritage Hotel is a 4 Star Hotel which is established in city centre at a stunning
waterfall site. Hotel has integrated itself with latest technology in order to provide luxury and
comfort to their guest. They have more than 600 room that are divided into different categories.
They offer 300 guest rooms, 250 standard rooms and 50 premium type of rooms to their guest.
Not only this, they also provide different kinds of luxurious, leisure and business tours to
different kinds of customer segment. Other than this, hotel also provide restaurant facility to their
customers, they have 125 seats restaurant, 50 seats bar longue for their customers. For business
class customers they also provide a 200 people conference and event place.
Pricing strategy evaluation
There are four main types of pricing strategies: economy, penetration, premium and
skimming pricing strategy. First type of strategy is economy pricing strategy in which product or
service is sold to customers at lower prices on the basis of its features and characteristics. Second
type of pricing strategy is Skimming pricing strategy in which products and services are offered
to the customers at higher prices according to the market competition (Sánchez-Pérez, Illescas-
Manzano and Martínez-Puertas, 2019). In penetration pricing strategy high quality products are
offered to the customers in lower prices as compared to their competitors. Last type of pricing
strategy is premium pricing strategy in which high quality products are offered to the customers
at higher prices. Blue City Heritage Hotel adopts two types of pricing strategy on the basis of
demand of their products. For all kin ds of premium services such as premium rooms, luxurious
tours and many more pricing strategies adopted by the Hotel is Premium pricing strategy in
which services adopted by the hotel. This pricing strategy is used for all high-quality luxurious
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products or services that are demanded by the customers. Another pricing strategy which is
adopted by Blue City Heritage Hotel is penetration pricing strategy. This pricing strategy is used
by hotel to offer products or services like guest rooms, standard rooms, restaurant services, bar
facilities and many more to the customer in which higher quality of rooms is maintained and is
offered to the customers at lower price i.e. price at which these services are affordable to the
customers.
Blue City Heritage Hotel has different types of and different segment of the customers
and these two pricing strategies have been adopted by the customers as per their customer
segment. Adoption of these two pricing strategies helps them attract a greater number of
customers and increase their overall profitability. These strategies also help them to gain
competitive advantage and sustain within this competitive market. Pricing strategies adopted by
the hotel never changes however, rate or prices of the products or services that are being offered
by to the customers does vary as per the demand of the products and services and on/ off seasons
as well. However, variation is price of premium products or services is quite less but in off
season slight variation in these services does occur. But in on and off season there is drastic
variation is other standard products and services. In on season when demand of all the products
is higher no discount is offered to the customers. Standard products and services are offered to
the customers is same prices without any kind of discounts. But in off season same products and
services are offered to customers at lower price then usual and lower than the competitors. In this
season’s customers are provided with various kinds of discounts, offers, coupons, additional
services and many more which helps Blue City Heritage Hotel to attract a greater number of
customers and increase their overall profitability.
According to the data available on hotel’s website in on season demand of their products
is quite high due to which availability of the products is lower because of which prices of all of
their products and services is quite high at this time. Even in on season their prices vary a bit i.e.
during week days prices of guest rooms, standard rooms premium rooms and other services are
high but till a certain limit but during on season weekend rime or holiday time prices of same
products and services are at their peak. In fact, during festival season or at the time of celebration
it is difficulty to get booking within the hotel as demand of its products and services are
extremely high. But during the peak season it becomes difficult to manage availability of their
products, services and resources that are required in order to provide excellent services to their
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